Can a lawyer set up a sham conveyance and reconveyance to put a lien or mortgage on property he knows is a homestead?

Plain-English summary

The inquiry asked whether it violated the Canons for an attorney who knows property to be a homestead to follow the regular practice of having the owner convey to a third party who reconveys to the owner while retaining a vendor's lien, or who executes a mortgage and reconveys to the owner who assumes the mortgage. The device was used to place a lien or mortgage on property that homestead law would otherwise protect.

The committee was unanimous that such practice violated the canons. Some members cited American Bar Canons 15 and 32, Texas Bar Canon 29, and Article 309 of the Revised Civil Statutes of Texas. Other members took the view that the practice was a subterfuge frequently condemned by the courts and should be, and was, condemned by the committee. The vote was 10-0.

Currency note

This opinion was issued in 1951, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Subsequent rule amendments or later opinions may have changed the analysis; a lawyer's duty not to assist a client in conduct the lawyer knows is fraudulent or a subterfuge is now addressed by ABA Model Rules 1.2(d) and 8.4(c). Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Why did the committee condemn the convey-and-reconvey device?

A: Because the lawyer knew the property was a homestead, and the committee viewed the round-trip conveyance as a subterfuge to place a lien or mortgage on property homestead law protects, a practice it said the courts had frequently condemned (10-0).

Q: Did the committee agree on a single rationale?

A: Not entirely. Some members grounded the violation in specific Canons and a statute (ABA Canons 15 and 32, Texas Canon 29, and Article 309 of the Revised Civil Statutes), while others rested on the practice being a court-condemned subterfuge; all agreed it violated the canons.

Background and rules framework

The opinion interprets former Texas Canon 29 (the duty of an attorney to the law), with some members invoking ABA Canons 15 and 32 and Article 309 of the Revised Civil Statutes of Texas, applied to a lawyer who assists a transaction designed to defeat homestead protection. The modern analogs are ABA Model Rule 1.2(d) (a lawyer may not counsel or assist conduct the lawyer knows is criminal or fraudulent) and Model Rule 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation).

Citations and references

Rules of Professional Conduct:

• MR 1.2(d) (assisting client crime or fraud), as the modern analog
• MR 8.4(c) (dishonesty, fraud, deceit, or misrepresentation), as the modern analog
• Texas Canon 29, ABA Canons 15 and 32

Statutes:

• Article 309 of the Revised Civil Statutes of Texas (cited by some members)

See also

• TX Ethics Op. 47: Conflicts of Interest in a Will-Interpretation Suit
• TX Ethics Op. 53: Power-of-Attorney Clause Assuming All Costs

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-39/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_39.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION PRESENTED

Is it a violation of the Canons of Ethics for an attorney, who knows the property in question to be a homestead, to follow the regular practice of having the owner convey to a third party who reconveys to the owner retaining a vendor's lien, or who executes a mortgage and reconveys to the owner who assumes the mortgage?

18 Baylor L. Rev. 212 (1966)

DUTY OF AN ATTORNEY TO THE LAW - HOMESTEADS
An attorney who knows the property in question to be a homestead may not have the owner convey to a third party who reconveys to the owner retaining a vendor's lien, or who executes a mortgage and reconveys to the owner who assumes the mortgage.

Canon 29.

It is the unanimous opinion of this committee that such practice is a violation of the canons. Some members cited American Bar Canons 15 and 32, Texas Bar Canon 29, and Article 309 of the Revised Civil Statutes of Texas in support of their views. The other members expressed the view that such practice constitutes a subterfuge which has been frequently condemned by the courts, and should be, and is, condemned by this committee. (10-0)

Tex. Comm. On Professional Ethics, Op. 39 (1951)